Interview: Jorma Ollila; "We will continue on the road we've created"

What's a buttoned-down banker doing heading a company that is so obviously with it? BT's R.Sukumar met with Nokia's Jorma Ollila to learn about managing in the wired world.

Q. Mr Ollila, Nokia is a company that operates in an extremely hi-tech business. Deciding on strategy in such an environment should be very difficult. How does Nokia do it?

I think we have tried to find the right balance between two things: innovation or looking forward on what is needed to produce the kind of products that the future marketplace wants, and operational excellence. This is a tricky balance. You can very easily fall into the trap of having one great product. You have a successful gadget. Everybody wants it. You just wish to improve the gadget a little. Yes, you can get operational excellence this way, but it is easy to forget that what you need next year, even next month, might be significantly different. Even if you are working with the same kind of competencies, skill-sets, and technologies. So, you have to innovate all the time, renew yourself all the time, come up with new products, look at what the Net means to mobility, and maintain operational excellence. This is tough. Often, it is not the same set of people who get to do the innovation part, and produce 80 million phones a year.

Defining your role in the industry is very important--this is the basis on which the company takes decisions. The way in which we've tried to do this is to be honest in our appraisal of where our ability to add value lies. Where do we add value to the game? Where do we have some advantages vis-a-vis our competition? Then, we're loyal to that, rather than dream that we can do all sorts of things. When the value chain continuously changes, you have to be honest in judging where your ability to add value rests. That helps us answer several questions: what is the role of R&D? What should manufacturing do? And what roles do design, brands, and global distribution have to play. Everything else follows.

Maintaining a balance is fine. But how do you foster a culture of innovation in the organisation?

The Person

Name: Jorma Ollila
Age: 49 years
Educational qualifications: M.A. (Political Science), University Of Helsinki, 1976; M.S. (Economics), London School Of Economics, 1978; M.S. (Engineering), Helsinki University Of Technology, 1981
Track record: Accounts Manager, Citibank, 1978; Member, Board of Management, Citibank, 1983; Vice-President (International Operations), Nokia, 1985; President, Nokia Mobile Phones, 1990; Chairman & CEO, Nokia, 1999
Hobbies: Travelling
Why BT interviewed him: Because he heads the company that will change the way we will live and work in the 21st Century.

The main responsibility for product development in Nokia lies with the line management--the business unit R&D cells we have in place. But we have 2 ways of making sure that innovation is constant, and that comfort levels do not reach very high levels in existing businesses. We have a research centre, where 1,000 people are researching basic technologies.

The second is the `new venture' organisation. We hope to encourage those new ideas--either from within the organisation, or grabbed from elsewhere--that we can develop into businesses in a reasonable time-frame. But this is outside the existing business organisation. Because the mobile phones business organisation may be bogged down looking at its own business. The network business may be looking at innovations in its own area. But the kind of ideas that are a little off the ordinary, a little outside the span of thinking of the business units--you need a home for them as well. Which is why we created Nokia Ventures.

Nokia makes end-user devices, helps service-providers set up networks, and develops platforms and applications for mobile computing. But you've never tried to get into the access business. Isn't that a potential choke point?

I don't foresee us in the network business. It's a very different business, you need very different capabilities. Of course, we communicate with network companies all the time. We need to understand them, and their needs. But going in there and being an owner and deciding that we have some real value to bring to how those business are run, no. We don't have that. I think we will continue on the road we have created.

What happens if you realise Nokia doesn't have the capabilities to meet the needs of your network customers or end-use customers? Is that where alliances originate?

If we lack some technologies, or have to deal with issues related to local market access, we may need to complement our capabilities. We are willing to look at small acquisitions in such cases. We have completed 6 acquisitions in the last 12 months. We have also looked at alliances with other industry players. Symbian and Bluetooth are 2 typical examples where we work with other industry players to develop solutions jointly, and with an open-standard philosophy.

Nokia claims to believe in this concept called the mobile information society. But what kind of devices will people use in this society?

The key thing is to look at what bringing together mobility and the Net will do. We believe that mobility as a trend will continue, and that Net-penetration will increase significantly. More importantly, you can access the Net through a mobile device. We will be developing both the network capability as well as the handsets for this. That will mean there will be a multitude of devices for different uses and, very often, optimised to a certain type of content. So, the content will drive the way in which the devices have to be designed.

It will be a device from which you can not just make a call but also access the Web, enter into e-Commerce transactions, check your bank-balances, pay your bills, and order stuff. It will be a personal device. It will be your most treasured device because it will be the channel to your money. It will also be the access-point to information, as well as the gadget that helps you to communicate.

Over the last 5-6 years, Nokia has emerged as a strong consumer brand; not just a technology brand. How has this happened?

We started building our brand in 1991. We have built our brand-promise on the basis of the premise that it's not just the product or the advertising, but something far more intrinsic that creates significant long-term capital--capital that you would call brand equity. It starts from the way the company operates; it's the corporate culture; it's the values that the company represents; and the product and the brand promise are simply an expression of that.

That means there needs to be sufficient emphasis on having all other ingredients in place in order for the brand advertising and brand support to be effective. We are a company which is about connecting people and user-friendly technology. We have a little bit of a youthful image in the market. We were the first company to bring market cellphones with coloured covers; we were the first ones to bring a variety of ringing tones. All these are expressions of what the brand is all about.

In the next 3 to 4 years, where is the competition to Nokia going to come from? Not just in terms of products, but in terms of your role in the mobile information society.

I think it's going to come from the telecom companies and some of the infotech organisations which are developing the solutions, applications, and the platforms to build services on. From the network side, the infotech organisations will be very important players. From the handset side, I do not think there is going to be any new entrant in the next 5 years.

Most companies in the hi-tech business seem forced to play the role of a facilitator, where you form an alliance with another company to encourage it to do something which it might otherwise not do

Some of this is structured, and some of it happens based on impromptu contacts which can be incidental. We think about it a lot. Whom do we need? What is the new value chain? Whom else do we need in order to add value to our proposition?